The loss of 12,200 jobs in January is troubling news for a government hoping to wipe the slate clean and reboot its policy strategy.
"These are disappointing figures," Prime Minister Tony Abbott told parliament on Thursday after an unexpectedly big jump in the unemployment rate to 6.4 per cent, its highest level since mid-2002.
But he remains optimistic about the employment outlook, with job advertisements having increased in each of the past eight months.
But that did not wash with Labor employment spokesman Brendan O'Connor, who said it was clear the government had no real plan for jobs, citing the jobless number was 100,000 greater than when the coalition came to power in September 2013.
"There's been more than 12,000 jobs lost this month, and the prime minister was only looking to save one - his own," he told reporters in Canberra.
Employment Minister Eric Abetz disagreed, insisting that axing the carbon and mining taxes would help create and maintain jobs, as would the free-trade agreements Australia had secured with Japan, South Korea and China.
"Will they work magic overnight? No," he said.
"But what it does is create confidence in manufacturers ... and hopefully growing jobs in a whole range of areas, as seen in the agricultural sector."
Treasurer Joe Hockey said the government was also getting on with the biggest infrastructure commitment in Australia's history, which would help deliver jobs.
But he noted the Victorian government had ditched the East West Link road project.
"They have just torn up 7000 job contracts," Mr Hockey told parliament.
The Australian Chamber of Commerce and Industry says the rising jobless rate demonstrates the urgent need for the workplace relations system to be modernised.
Reserve Bank governor Glenn Stevens will have the opportunity to give his take on the jobs figures when he faces a parliamentary committee on Friday.
The central bank cut the cash rate for the first time in 18 months last week to a record-low 2.25 per cent, saying the unemployment rate was likely to peak higher than earlier thought.
Financial markets are betting on a near-70 per cent chance of another cut in March following the jobs figures.
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